Tapestry Health seeks fix for money problems

Two months after eliminating jobs and seeing its longtime chief executive officer resign, leaders of Tapestry Health say the organization is battling its way out of debt and is committed to a recovery within three years.

The Northampton-based nonprofit agency, which serves Franklin County, is adding board of directors members with financial backgrounds as it takes a more active role in overseeing the agency’s finances, which suffered from a series of annual losses aided by loose financial controls from within and a top-heavy administration, interviews and financial records show.

“There was always great attention paid to the services we were providing to clients and less focus on the financials of the agency and at some point, I think that started to get away from us a bit,” said Jan Albano, Tapestry’s new board treasurer. “We couldn’t continue along those lines.”

Founded in 1973 by Leslie Tarr Laurie, Tapestry Health operates on an approximately $6 million budget, employs 120 people and provides health and family planning service to thousands of residents in western Massachusetts.

The agency’s initial focus was on women’s reproductive health but it evolved over four decades into a regional, community-based health care organization that runs eight health centers, needle exchange and nutrition programs as well as breast and cervical cancer screenings, sexual health exams, counseling, outreach education and insurance enrollment programs.

Attempts to reach Laurie for comment by phone and email in recent months have been unsuccessful.

The board recently appointed its chief financial officer, Sudhakar Vamathevan, as interim CEO until it conducts a national search for a permanent leader. Vamathevan joined the agency a year ago.

“We are confident that Sudhakar can help Tapestry regain its financial footing and will work with the board and staff to frame our plan for the future,” Satu Zoller, chairwoman of Tapestry’s board, said when announcing the appointment this month.

Financial challenges

Although Tapestry has not cut services, board members say the organization could no longer afford the size of its administration and had to substantially reduce expenses. The agency’s liabilities exceeded its assets by approximately $700,000 about three years ago, a figure that Tapestry has been able to reduce to just under $300,000, which continues to be flagged as a concern among the agency’s auditors and grant providers. The agency has an approximately $600,000 line of credit with a bank that is now maxed out. It is planning to refinance, according to board members.

“Extensions of the line have been requested at times in order to meet the cash needs of the organization,” an audit by Myers Brothers Kalicka of Holyoke states.

The state Department of Public Health, which provides significant money to the agency, placed Tapestry on a conditional status on Feb. 28 based on concerns about its financial viability, but it has not withdrawn any funding because of the services Tapestry provides to the area, according to the state agency.

“The organization has also expressed willingness to meet the terms of the corrective action plan,” Anne Roach, a DPH spokeswoman, wrote to the Gazette in an April 16 email. “DPH will continue to monitor the ability of Tapestry to deliver the contracted services to the communities it serves.”

Tapestry’s last annual audit detailed a series of recommendations to improve the agency’s financial affairs, including better controls for timecard and payroll allocations, credit card use, approval of executive director compensation and information technology security.

“There wasn’t excess spending,” she added. “We just didn’t feel we had sufficient controls in place.”

The audit recommended Tapestry add financial experts to its ranks, which it is doing, and to strengthen its controls over technology access and software as well as develop a disaster recovery plan.

The agency plans to retain a consultant to help implement an information technology plan.

According to the audit, Tapestry’s board and management are working with a nationally recognized nonprofit consultant to develop a strategic plan, a process that started two years ago but was never fully developed.

They also are implementing a financial recovery plan and working with state and federal funding agencies to continue to provide its services and ensure its contracts and grants are meeting performance measures.

Albano and Zoller said the board remains positive about the Tapestry’s future and its ability to provide vital services to the region.

They praised the staff for working to find efficiencies and keep clinics running during challenging times.